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Pols welcome WTO ruling; analysts say it won’t change much

Politicians responded enthusiastically to the World Trade Organization’s ruling Friday that European Union governments illegally subsidized Airbus, although analysts said the immediate impact would mostly be political point scoring.

“This is a great day for Washington State and the Boeing Company,” Sen. Maria Cantwell said in an audio message. “The WTO has decided that these are unfair susidies being used against Boeing in the marketplace. We don’t want a marketplace where price is being distorted by government subsidies. Instead, we want a level playing field, and that’s what we got today.”

In a written statement, Sen. Patty Murray said:

This ruling is much more than a confirmation that Airbus has been breaking the rules. It is a victory for American workers who produce the world’s best planes but who have been forced to fight an uphill battle. It is a warning to other countries considering entering the aerospace marketplace that launch aid is the wrong example to follow. And most importantly, it’s a ruling that reaffirms the spirit of free and fair trade in the international marketplace.

U.S. Rep. Rick Larson’s statement said:

This ruling confirms what U.S. officials have been saying for years – Airbus is hooked on illegal fiscal steroids.
Today’s ruling sends a strong message to our workers: We will not sit on our hands while Europe pumps up Airbus. We will fight to give you the level playing field that you deserve.

But analysts said the ruling wouldn’t have any practical impact, for now.

“It provides a real morale boost for the winning side, and it possibly creates a real headache for European politicians, but it certainly doesn’t lead to anything directly tangible for Boeing,” said Richard Aboulafia, an aerospace analyst with the Teal Group.

Analyst Scott Hamilton, of Leeham Co., took a similar view.

“The immediate affect will be political and public relations points,” he wrote.

Aboulafia and Hamilton noted that the process of finalizing the report, and then appeals, could delay any retaliatory sanctions for years. Even then, Hamilton noted:

Sanctions do not have to be imposed on the losing party’s affected company–in this case, Airbus. The USA could impose sanctions on the French wine industry or German bratwurst imports. Likewise, if the EU prevails in its counter-complaint over Boeing subsidies (as expected) in a staff report due within six months, the EU could impose penalties on Washington State apple exports. Or either side could elect not to impose any penalties at all, as was the case in a WTO ruling that Canada and Brazil both violated export subsidy rules in support of Bombardier and Embraer regional jets.

And European governments could just find more covert ways of aiding Airbus, Hamilton said. “They would be able to probably provide most of the same support (covertly).”

In a written statement, Cantwell noted media reports that European countries planned to go ahead with aid for Airbus’ A350, regardless of the WTO ruling.

“I strongly urge the Europeans to listen to the WTO and reverse course,” she said.

Last month, The Hill newspaper said Cantwell, who sits on the Finance Committee, and Murray, a defense appropriator, “have been among the most outspoken critics of the Pentagon not taking the WTO dispute into account” in deciding whether Boeing or a team of Northrop Grumman and Airbus parent EADS gets the contract for new Air Force aerial refueling tankers.

The Department of Defense “has consistently said they plan to conduct a fair an open competition to award the tanker contract,” Murray said in her Friday statement. “But if DoD wants a truly fair competition, it needs to start with competitors that play by the rules. DoD needs to answer to how this violation of WTO rules will be considered in the competition for the vital aerial refueling tanker.”

Larson said: “As the Department of Defense moves forward on purchasing the next generation of aerial refueling tankers, I will fight to make sure that U.S. taxpayers don’t foot the bill for illegal European subsidies.”

This argument stands a much better chance of working with Democrats in charge Aboulafia said. “Politically, the Boeing plane is far more of a Democratic Party aircraft, and the Northrop-EADS plane is far more Republican.”

Boeing would build its tanker in Democratic Washington, while the Northrop-EADS team would roll its out in Republican Alabama.

Hamilton warned Boeing and its supporters “to be careful about how much they bear down on the tanker issue.

“When the WTO renders its staff report on the EU complaint over Boeing subsidies, and if as expected Boeing is found in violation of WTO rules, too, Northrop and its supporters can be expected to counter that Boeing behaved illegally as well,” he wrote. “Taking this argument to its absurd and illogical conclusion, the only one left building a heavy jet tanker is the Russians.”

Note: This is a seattlepi.com reader blog. It is not written or edited by the P-I. The authors are solely responsible for content. E-mail us at newmedia@seattlepi.com if you consider a post inappropriate..